Federal Student Aid Director Richard Cordray has extended President Joe Biden’s relief program deadline for some student-loan holders.
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Important Updates and Extended Deadlines for Borrowers
Cordray revised the income-driven repayment plan and Public Service Loan Forgiveness applicants’ one-time account adjustments. Education Department federal loan applicants don’t need to do anything because the department finds appropriate borrowers. Private FFEL loans must be integrated into government direct loans. FFEL borrowers can consolidate until April 30, 2024.
Commercially managed FFEL and Perkins borrowers should consolidate immediately to maximize adjustment benefits. Due to the 60-day consolidation process, Cordray recommends applying early. The Education Department’s account adjustments erased thousands of student loans. The adjustments have helped 800,000 borrowers since August, and 80,000 received $5 billion recently.
Cordray said the government would modify accounts by July 2024. Unforgiven borrowers will receive an updated payment count to track progress. Cordray warned that loan servicers may take weeks to update their systems after the modification, preventing most customers from tracking forgiveness progress.
40% Miss Payments, Education Department Implements On-Ramp
Education Department witnessed millions of debtors struggle after three years of government payments suspension. Recent analysis indicated that 40% of 22 million October borrowers missed payments.
The department developed a 12-month “on-ramp” to insulate vulnerable borrowers from credit agency missed payment reports. Next year, the agency will seek public opinion on a new Higher Education Act student-debt relief proposal.
